3 ms·

Housing prices rose not because of two-income households but because of housing shortages. Because homes for sale are in short supply, the homeowner can pick an

by nayuki 3y ago

Housing prices rose not because of two-income households but because of housing shortages. Because homes for sale are in short supply, the homeowner can pick and choose the highest bidder.

seadan83 3y ago
This ^ Though, I think we need to find data to support the claims in this thread. More income and more demand in housing could increase prices,but also increase the viability of building houses and just as plausibly lead to an increase in home construction.
- chiefalchemist 3y ago
  Keep in mind, the divorce rate as also increased. That has: Increased housing demand Limited the collective buying power of both households
chiefalchemist 3y ago
Yes, supply has been limited. But demand - as well as what the market will bear* - has also increased. Price is a function of all three. * We had the 30 yr mortgage and now 40 yr and 50 yr mortgages are seen as a way to make buying a home more affordable. Unfortunately, it doesn't work that way. The longer term lowers the monthly payment (temporarily) but at the same time demand is increased. When demand is increased...wait for it...prices increases. On the other hand, as unpopular as this might be to say, limiting mortgages to 25 yrs, 20 yrs, or less would lower demand. Yes, please, also increase supply. If you want a comparable example, look at student loans. More loans, larger loans and lower rates...increased demand, as well as what the market could bear and...prices went up, up, up. This isn't rocket science. It's Economics 101. Unfortunately, most of our political "leader" are versed in law, not basic economics.
- nayuki 3y ago
  Everything you said is true. I kept my original comment short to emphasize the shortage as the main cause of price increases. A shortage occurs when supply is less than demand. It can happen even as both increase, as long as supply increases more slowly than demand. I like to view housing as a game of musical chairs. If you have 100 chairs but 300 people competing for the chairs, 200 people will necessarily walk away disappointed. If people get dual incomes and longer mortgages (with lower monthly payments), that's like giving people faster legs. There are still 100 chairs and 200 people disappointed at the end of the day.
  - chiefalchemist 3y ago
    I sense we agree. If nothing else that what is being sold as solutions aren't.

by nayuki 3y ago

Housing prices rose not because of two-income households but because of housing shortages. Because homes for sale are in short supply, the homeowner can pick and choose the highest bidder.

seadan83 3y ago

This ^ Though, I think we need to find data to support the claims in this thread. More income and more demand in housing could increase prices,but also increase the viability of building houses and just as plausibly lead to an increase in home construction.

chiefalchemist 3y ago
Keep in mind, the divorce rate as also increased. That has: Increased housing demand Limited the collective buying power of both households

chiefalchemist 3y ago

Yes, supply has been limited. But demand - as well as what the market will bear* - has also increased. Price is a function of all three. * We had the 30 yr mortgage and now 40 yr and 50 yr mortgages are seen as a way to make buying a home more affordable. Unfortunately, it doesn't work that way. The longer term lowers the monthly payment (temporarily) but at the same time demand is increased. When demand is increased...wait for it...prices increases. On the other hand, as unpopular as this might be to say, limiting mortgages to 25 yrs, 20 yrs, or less would lower demand. Yes, please, also increase supply. If you want a comparable example, look at student loans. More loans, larger loans and lower rates...increased demand, as well as what the market could bear and...prices went up, up, up. This isn't rocket science. It's Economics 101. Unfortunately, most of our political "leader" are versed in law, not basic economics.

nayuki 3y ago
Everything you said is true. I kept my original comment short to emphasize the shortage as the main cause of price increases. A shortage occurs when supply is less than demand. It can happen even as both increase, as long as supply increases more slowly than demand. I like to view housing as a game of musical chairs. If you have 100 chairs but 300 people competing for the chairs, 200 people will necessarily walk away disappointed. If people get dual incomes and longer mortgages (with lower monthly payments), that's like giving people faster legs. There are still 100 chairs and 200 people disappointed at the end of the day.
- chiefalchemist 3y ago
  I sense we agree. If nothing else that what is being sold as solutions aren't.